Andrew Thomas, CEO of Patterson Technology Incorporated (PTI) is planning next year's capital budget. PTI is at its optimal capital structure, which is 30 percent debt and 70 percent common equity. The company's earnings and dividends are growing at a constant rate of 16 percent. The last dividend, Do, was $1.50, and the company's stock currently sells at a price of $42.50 per share. PTI can raise debt at a 9 percent before-tax cost. PTI projects net income of $860,000, and its dividend payout ratio is 20 percent. If PTI issues new common stock, a 7 percent flotation cost will be incurrd. The firm's marginal tax rate is 40 percent. Assuming the optimal capital structure must be maintained, how much new debt capital has been spent when the firm runs out of the expected retained earnings? A. $225,738 B. $294,857 C. $312,008 D. $325,144 E. $339,712 Andrew Thomas, CEO of Patterson Technology Incorporated (PTI) is planning next year's capital budget. PTI is at its optimal capital structure, which is 30 percent debt and 70 percent common equity. The company's earnings and dividends are growing at a constant rate of 16 percent. The last dividend, Do, was $1.50, and the company's stock currently sells at a price of $42.50 per share. PTI can raise debt at a 9 percent before-tax cost. PTI projects net income of $860,000, and its dividend payout ratio is 20 percent. If PTI issues new common stock, a 7 percent flotation cost will be incuried. The firm's marginal tax rate is 40 percent. Calculate WACC2 in the MCC schedule. A. 16.23 percent B. 15.14 percent C. 15.67 percent D. 15.49 percent E. 15.90 percent A B